AGA Exam CGFM Topic 4 Question 65 Discussion

Actual exam question for AGA's CGFM exam

Question #: 65
Topic #: 4

[All CGFM Questions]

A state transfers cagh to a broker and the broker transfers securities to the state, promising to repay the cash plus

interest in exchange for the return of the same securities. This transaction is an example of

Aan arbitrage agreement.

Ba repurchase agreement.

Ca mutual buy-sell agreement.

Da reverse repurchase agreement.

US. Department of the Treasury, Guide to Federal Investments.
Financial Accounting Standards Board (FASB), Accounting for Repurchase Agreements.

Show Suggested Answer

Suggested Answer: A

by Felix at Jan 23, 2025, 02:50 AM

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Ressie

7 days ago

I'm not sure, but I think it could also be D) a reverse repurchase agreement, where the broker sells securities to the state with an agreement to repurchase them later.

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This is a tricky one! I was tempted to go with A) an arbitrage agreement, but the mention of the state transferring cash and the broker transferring securities makes me think B) a repurchase agreement is the correct answer.

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Amber

8 days ago

I agree with Rochell, because in a repurchase agreement, securities are sold with a commitment to repurchase them at a later date.

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Tran

16 days ago

Hmm, I'm not sure about this one. The wording is a bit confusing, but I'm leaning towards D) a reverse repurchase agreement. Isn't that when the broker sells securities to the state and promises to buy them back?

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Kenda

17 days ago

I think the answer is B) a repurchase agreement. The description matches the definition of a repo, where the state sells securities to the broker and agrees to buy them back later with interest.

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Rochell

25 days ago

I think the answer is B) a repurchase agreement.

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AGA Exam CGFM Topic 4 Question 65 Discussion

Contribute your Thoughts:

Ressie

Allene

Amber

Tran

Kenda

Rochell